For several years, high oil prices enabled the Gulf Cooperation Council countries to add large sums to their state coffers. Falling oil prices imply that some Gulf countries may need to draw on their depleted funds to cover their import bills. In this Center for Geoeconomic Studies Working Paper, Brad W. Setser and Rachel Ziemba examine the impact of the fall in global equities on the Gulf’s large funds and explore how various oil price scenarios could shape those funds’ future growth.

Brad Setser argues that the best way to address concerns over sovereign wealth are policy shifts in the United States and abroad that would reduce surpluses abroad and U.S. deficits, and bring the U.S. external deficit back to a level that could be more easily be financed by private demand for U.S. assets.

In this Wall Street Journal op-ed, Benn Steil argues that Calpers, the California Public Employees' Retirement System, is best viewed as a highly political "sovereign wealth fund." Governed by state political figures and union representatives, Calpers' investment decisions are frequently guided by foreign policy and social agendas rather than fundholder interests.

In this testimony, Brad Setser examines the forces that have propelled the growth of sovereign funds and the differences among sovereign funds. In particular, he looks at the issues raised by the increase in the non-reserve foreign assets of China’s government.